- The Indian Rupee gains traction, supported by lower US Treasury yields and weaker Dollar.
- India’s Wholesale Price Index (WPI) inflation remained in the deflationary zone in October.
- India’s trade balance and Producer Price Index (PPI) as well as US retail sales will be released on Wednesday.
The Indian Rupee (INR) is trading firm on Wednesday on declining US Treasury yields. On Tuesday, Indian inflation, as measured by the wholesale price index (WPI), remained in the deflationary zone for the seventh consecutive month in October, standing at -0.52% against -0.26% previously. That said, overall manufacturing price developments helped reduce wholesale inflation in October. However, India remains vulnerable to rising oil prices as it is the world’s third largest consumer of crude oil.
Market participants will be keeping an eye on Indian trade balance data for October. Meanwhile, the Reserve Bank of India (RBI) is likely to intervene to prevent volatility in the domestic currency, which could limit INR depreciation in the short term. In addition, the Producer Price Index (PPI) and US retail sales will be published on Wednesday.
Daily Market Summary: Indian Rupee Trades Strong, Dollar Falls After Weak US Inflation Data
- Headline retail price inflation in India fell to 4.9% in October, its lowest level in four months, from 5% previously.
- India’s Wholesale Price Index (WPI) inflation stood at -0.52% versus -0.26% previously, below estimates of -0.20%.
- The Indian Consumer Price Index (CPI) rose 4.87% year-on-year in October, up from 5.02% previously, above the market consensus of 4.80%.
- The Reserve Bank of India (RBI) has held interest rates steady for four consecutive meetings and maintains a relatively aggressive policy to ease price pressures.
- RBI Governor Shaktikanta Das stated that India remains sensitive to food price shocks and monetary policy continues to push inflation towards the 4% target.
- The RBI expects India’s GDP to grow at an annual rate of 6.3% in the current fiscal year.
- The US Consumer Price Index (CPI) grew 3.2% year-on-year in October, up from 3.7% previously, below the forecast of 3.3%.
- The US core CPI, which excludes food and energy price volatility, rose 0.2% month-on-month and 4.0% year-on-year.
- According to the CME’s FedWatch tool, Fed funds futures do not forecast any further rate hikes this cycle.
Technical Analysis: Indian Rupee Strengthening, But Upside Potential Seems Limited
The Indian Rupee is trading firm today. The USD/INR pair has hovered around the lower bound of the 83.00-83.35 trading range since late September. However, USD/INR remains in an uptrend as the pair remains above the key 100 and 200 day EMAs on the daily chart.
The initial support level for the pair lies near the September 12 low at 82.82. If the selling continues, losses will extend to the September 22 low at 82.75, followed by the August 4 low at 82.65.
To the upside, the immediate bullish barrier will emerge near the upper limit of the 83.35 range. If it breaks above that level, a recovery to the yearly high of 83.47 will occur. The additional bullish filter to watch is the psychological round level of 84.00.
Dollar Quote in the last 7 days
The following table shows the percentage change of the United States Dollar (USD) against major currencies in the last 7 days.
| USD | EUR | GBP | CAD | AUD | JPY | NZD | CHF | |
| USD | -1.66% | -1.59% | -0.59% | -1.14% | 0.20% | -1.52% | -1.27% | |
| EUR | 1.64% | 0.08% | 1.07% | 0.52% | 1.84% | 0.15% | 0.40% | |
| GBP | 1.57% | -0.06% | 1.00% | 0.47% | 1.78% | 0.08% | 0.33% | |
| CAD | 0.58% | -1.08% | -1.01% | -0.54% | 0.78% | -0.94% | -0.68% | |
| AUD | 1.11% | -0.53% | -0.46% | 0.54% | 1.32% | -0.39% | -0.13% | |
| JPY | -0.20% | -1.87% | -1.81% | -0.78% | -1.37% | -1.72% | -1.47% | |
| NZD | 1.50% | -0.14% | -0.07% | 0.91% | 0.39% | 1.70% | 0.25% | |
| CHF | 1.27% | -0.37% | -0.30% | 0.69% | 0.14% | 1.47% | -0.24% |
The heat map shows the percentage changes of the major currencies against each other. The base currency is chosen in the left column, while the quote currency is chosen in the top row. For example, if you choose the euro in the left column and scroll down the horizontal line to the Japanese yen, the percentage change in the box will represent EUR (base)/JPY (quote).
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
